When an auditor finds that a client has engaged in significant new debt or equity transactions, the auditor should_______.

Question

Quizplus · Accepted Answer

When a client engages in significant new debt or equity transactions, the auditor should be prepared to study a significant volume of legal documents related to the financing transaction in order to determine the impact of any legal requirements. This will help the auditor gain an understanding of the terms and conditions of the financing, as well as any potential risks to the financial statements. The auditor should also consider obtaining additional written representations from management to increase the assurance level, but this should not be the only course of action taken.

When an Auditor Finds That a Client Has Engaged in Significant